Retail woes soon to bite Westfield earnings

Annual profits at the world's biggest shopping centre operator have jumped in line with expectations, helped by high levels of occupancy and rent increases.

Westfield says its full year net profit for 2012 rose by more than 18 per cent to $1.72 billion.

The company said its Australian shopping centres performed well, despite what it called subdued retail conditions for most of the year.

However, the company is forecasting much slower profit growth ahead.

This year Westfield is predicting net operating income to grow by at least 4 per cent in the UK and US, but by as little as 1.5 per cent in Australia in New Zealand.

Westfield co-chief executive Peter Lowy says there is a lagged reaction to subdued retail sales for the company.

"Our assumption in that are a similar occupancy level, 2 per cent inflation rate, reviews probably around flat and when we get stores back to re-leasing of those at a slight reduction, and our analysis will show between 1.5 to 2 per cent on that," he said.

The company's joint CEOs, Peter and Steven Lowy, say it is aiming to overcome retail weakness by creating a more holistic experience.

"Our strategy is to develop and own superior retail destinations in major cities by integrating food, fashion, leisure and entertainment using technology to better connect retailers with consumers," they noted in the report.

The company says it now holds assets valued at $64.4 billion and, together with various partners, has a $12 billion pipeline of development work, including new centres in Milan and London's Croydon, as well as a range of redevelopments.

Work also commenced on Westfield's World Trade Centre retail development in New York last year.